In recent weeks we have seen a handful of U.S.-listed Chinese companies involved in significant controversy. Many of these incidents have been triggered by fraud allegations stemming from so-called research reports authored by investors who hold a short position in the subject company's stock. These research reports, often based on incorrect or misleading information, have initiated an extraordinary amount of class-action litigation and SEC investigations against the accused Chinese companies, resulting in an extreme loss of market value to investors and an unprecedented lack of confidence in investing in Chinese companies.

A recent article published in The Deal Magazine, authored by Mitchell Nussbaum, Chair of Loeb & Loeb's China Practice, examines the far-reaching impacts of this unfortunate trend, including potential threats to the Asia-Pacific financial markets and U.S. economic growth if regulatory practices are not put in place to protect Chinese companies and investors.

This article was published in the April 21, 2011 edition of The Deal Magazine. Permission for article reprint has been granted.